Hi, this scheme is quite interesting. However, there are few points that I am worried or somewhat skeptical in this scheme,
1. If general lenders are all guaranteed with what they lend without risking their own money, would they
just lend as much as they want so that they can maximize their returns because there is no fear in loosing their own money?
2. Guarantors only get a few percent of what they put in collateral for borrowers. So, if even a few of the borrowers
they guaranteed get default, their net profits are easily gone because the net profit from other is larger than what they put in collateral for one person? Does that means there is less incentive to join for guarantors?
3. You have stated there is only a micro-loan around 1000USD for max. with short term to be provided as a loan. Why there is such a small limit? If there is one who cannot even borrow such a small amount from legit institutions in real life, I wonder he or she might be the one who is the least credit and likely get into default.
Hope to get answers at least one or two above
Thanks,
1. General lenders lend money after a borrower is checked and had a loan scoring process.
There are credit reporting agencies almost in all countries, financial institutions usually check with a credit reference bureau a credit history of this or that person who asks for a loan or credit. Every and each borrower will be checked and a loan scoring procedure will be undertaken under him. Of course, there will be a lot of people from a higher risk group and that will be indicated in his/her profile in Suretly's application. It’s up to you whom to choose - low income with low risk or high income with high risk. You can always choose profiles with the minimum risk rate. It will depend on every voucher strategy.
2. First of all, guarantors don’t share an interest rate with lender. The borrower should pay to guarantors separately and the cost of voucher’s service will be between 5% (for low-risk borrowers) to 20% (for-very-high risk borrowers) from a loan amount.
Also, vouchers get their profit in the moment of a loan issuing, not at the end of a loan-period term. Every voucher can be responsible only for $10 dollars per each loan.
3. Of course, there are lot of such organizations which lend money for such short-term period.
Microcredits is a huge market. In the USA, for example, a half of an adult population is "underserved", that means they are not able to have a loan from classic lenders (such as banks). According to CSFI (Center for Financial Services innovation), such people spent up to $40 billion annually on fees and interest for such type of loans only in the US.
